rent is getting out of control
rent is getting out of control. people are spending more and more of their income on rent. someone who is a nerd can pull up the stats - but I would bet that the percent of income that renters are spending on rent today is much higher than it was during earlier periods of the history of the United States. this is only going to get worse and worse because housing is a monopoly - people need a place to live, and landlords can basically collectively charge whatever they want. what is the solution to this rent crisis? will people start taking remote jobs and moving to the middle of nowhere? should we relax the laws regarding how many people should be able to live inside a house (seriously a three story house is only legally allowed to house three to four people)? should we ban landlords from raising prices beyond a certain threshold? should we put shipping container homes in the backyard of every home in the United States? let's brainstorm how we can solve the rent crisis.
Inflation's a bitch ain't it.
is it even inflation or is it more landlords needing to jack up prices to meet return targets and renters literally having no choice but to collectively spend more of their income on rent since housing is a monopoly?
Inflation of housing prices + manufactured housing shortages with excess regulation is what causes the monopoly and drives these rent increases which are needed for RE investors to meet their hurdles. The fed is just permanently leaving the tap on and letting asset prices swell so regular people can't afford to be buyers. You will own nothing and you will be happy.
Personally, I would want to ban all foreign buyers from being able to purchase property in the US. Lease it for long periods of time? Sure. Buy it? Absolutely not. China especially, would love to see the US government just cancel (I realize that's not how it works) Chinese ownership of any property in the US and put it all to auction for US-only buyers.
Supply and demand sets the rent. Not a financial model.
It's government policy and taxation. NYC for example has a stated policy at city hall to make it impossible for apartment owners to be able to make any money at all. Between rent stabilization, property taxation changes and other policy changes the city is actively trying to make property owners call it quits and dump their properties. The whole idea is a repeat of what the city did back in the late 60s and early 70s of buying up all of the proeprty and renting it to people on a rent controlled basis. The idiots who run this city actually think this will work when it fails every time. The buildings will fall into disrepair, tenants will get shittier housing, and the buck will be continually passed on to market rate housing in the form of even higher rents.
This is the circle of life of bad political policies. Get rid of rent control, let everything hit the market rate, build good affordable housing that is propertly maintained and let the market take care of the rest. But no, we have to have idiots who know nothing about real estate meddle in the market.
Lol. Isn't it heresy to imply that the market isn't as close to perfect as we're ever going to get? Go look through these comments - most of them state that all we need to do to bring down housing prices is get rid of bureaucracy and red tape and let the market dictate where prices go. That isn't compatible with a market dynamic in which residents are forced into renting at whatever prices landlords choose.
Wait, there are limits? We had six people living in a 700 sqft 5th floor walk-up 3br way uptown off bway back in the day.
Honestly, the answer is building more housing. NIMBYs just won't allow it.
Agreed x100. More housing in general should be upzoned and there should be more "missing middle" housing. People at ULI/NAIOP/etc. events talk a lot about multifamily, and there are new developments in every market, but it's not being built fast enough and also not always addressing the target markets most in need (e.g., affordable housing, first-time buyers, middle class, etc.).
Great point on the "missing middle" - I found this to be a good explainer for others who aren't as familiar with the topic.
https://www.cnu.org/our-projects/missing-middle-housing
Or this is awesome for people who own properties. I’m loving the rent increases I’m getting. So please pipe down.
I’m not sure if there’s a real point in discussing policy solutions because any push for increasingly supply will take several years to materialize. Apartment complexes can’t be built or modified overnight and when it is being built it needs to pass safety checks to avoid collapse. I also doubt that the finance industry is going to pivot remote.
The only real answer is that NYC/LA and (arguably) tier 2 cities like Dallas/ATL/CHI/Miami are simply not worth it if you don’t see yourself in front office long term and intend to have a comfortable lifestyle with a family. Consider moving to less known cities or rural areas instead.
Current landlord is trying to raise my rent by about 30% at the end of my lease; luckily I'm already moving to a different city anyway. Frankly, the rent increases, coupled with the increase in homelessness, ridiculous politics, overcrowding, filth, etc, is just a sign to get away from many of these cities and move to more under the radar locations (or even different countries entirely).
100%. Alt left is turning major cities into alt left cesspools of crap. Why pay stupid prices for all of that plus major spikes in crime? Most of the Top 10 cities are all screwed in the long run
But good news is there is a structural shift away from these cities into smaller cities / rural spaces due to remote work. And honestly to your point on different countries, we've already seen a material share shift in companies / employment away from the United States (and the West more broadly) during Covid so it doesn't preclude moving countries if you want to
I think you’re math is a bit off. $4000 for a 2BR is cheaper than $2400 for a 1BR…
That sort of depends on the apartment and the living arrangement, and how you calculate "cheaper". On a per square foot basis, a 4,000/mo 2 bedroom could very well be more expensive than a 2,400/mo 1 bedroom
You're way overpaying in Atlanta. Can get a very nice 1BR for 1700 in a safe area. Truly no need to pay that amount
What's the problem with smelling weed in the hallways?
Classic lib take lol
Do you all reduce everything to conservative vs liberal? Weirdo shit.
You're the biggest lib on this forum & you always manage to insert a lib take. Would be almost certainly that you wanted to make a comment about how black people are oppressed and how it relates to weed (despite the fact that blacks are the most privileged in America today after AA & cultural influence of 'rap')
So we've found a way to turn an innocuous comment about weed in a hallway into an opportunity to bring up politics and casually call black ppl the most "privileged" because of the "influence of rap" (lol)... Do some of you have a mental illness? I barely post on this forum anymore because I gave up on trying to convince upper middle class Chads whose biggest problem is not being admitted to Harvard and going to Duke instead to look beyond their bubble and attempt to empathize with others. I just kick back and comment here and there about random shit, rarely ever will you see me in a political thread. I don't have the energy for it and those conversations go no where. WSO has fully devolved into 4chan - just look at the topics over the past few weeks. Off topic forum is half incel shit and half coded racism. It's sad but it is what it is. I still come here once in a while to get some professional nuggets from individuals I respect. Other than that you can keep doing whatever it is you thought you did with your post.
Literally just abolish residential zoning and the supply will come to meet demand.
NIMBYs restricting housing supply is the problem.
It’s why Tokyo has such reasonable rent despite being a literal metropolis.
Have you seen the apartments in Tokyo though? They are absolutely tiny, even my NYC closet would be considered a leaseable apartment. Obviously the rent for that is a bit cheaper, but the rent for a unit comparable to what you'd get in the US is equally or more expensive.
Houston doesn't have zoning, and while generally a LCOL city, their housing expense is in line or even more than comparable T2/T3 cities. And you get undesirable combos like new builds in between industrial sites, or a giant office tower next to older single family homes.
Hence why I said to abolish residential zoning. Industrial zoning has its place but single family zoning is the complete other end of the extreme.
I mean everyone can't have a spacious luxury apartment AND be cheap at the same time. We either have to downsize/live in higher density or shut up and pay up. Can't have your cake and eat it too.
Came here to say this. Tokyo has 3x housing supply of 20 years ago while NYC and SF are up like 5-10%.
Not even controversial - can be found in the WSJ: https://www.wsj.com/articles/what-housing-crisis-in-japan-home-prices-s…
the US has really fucked over everyone by allowing a small minority of homeowners to block any and all new construction
no, you dont have to live in a tiny apartment - the solution is building up. Manhattan buildings should be 100 stories tall on average.
Dont like the cost of rent then either move or find a way to make more money. It's entirely market driven, someone is paying what is asked for it.
phenomenal blog post that addresses some of these housing issues. Hope you get a chance to read it https://philo.substack.com/p/cartels
Sure, but rent is much more inelastic than other goods. People need a place to live and if they have to resort to it will get roommates/flex out a 1BR into 2 sections, etc. to ensure they have a roof over their head. Combine that with oligopolistic property management companies, and you have conditions ripe for collusion.
Other people have already mentioned the big drivers, but giant investment firms buying up single family homes and renting them out also seems like a negative for average joe hoping to own a home someday. I do think this could become a political issue at some point.
It should and will. RE investment firms owning all the properties -- a necessary good for humans to survive, essentially, is inherently immoral and is only going to get worse.
How is that any different from a private company/investor owning a pharma company, hospital, energy source, grocery store?
Agreed. I can see it taking at least a generation to come to a head. But in my mind the 30,000ft view is that with housing becoming so expensive, the younger cohort will adapt to just living in studio apartments (or dicing up a meager 1br/2br that ya'll do in NYC) and accept that in order to have a decent quality of life this is the optimum point on the expense:benefit curve for housing.
With that in place, other factors come in like the decline in pursuit of forming a family or not just simply additional sq/ft cost of a home, but now the yard, taxes, maintenance etc that all pile on top. So this cohort just simply stops caring to aspire to home ownership or for bigger apartments and condos. Then what happens? All the older generations who bought homes have no one to sell to except what we're seeing BlackRock and Zillow doing now. Even then, they have to recoup their costs, so rents go up, and the younger cohort they were counting on to fill that vacuum just choses not to.
That's when I think it becomes a political topic just from the standpoint of BlackRock et all orchestrating and lobbying for some kind of financial bombing to push government into either subsidizing rent for a blip to get people into the homes who then can't afford them after subsidies (resetting the cycle) or government gets the grand idea to buy up tracts of these homes to tear them down and build new high occupancy properties in their place (which are financed and sold to these REITs of course) and they still get their rent class.
Regardless of if any of that spurious rant has any merit, eat Domino's. Make sure they always have a home, in your home.
Remote work/WFH , and smart states (see: Texas) competing for new corporate HQ will incentive businesses to start there, pulling out from NYC, LA, SF, etc. and building up smaller mid sized cities. Austin is a stereotypical example but you will see a bunch of mini Austins build out in the future all across America.
Dont see this being a problem in the future IMO. Rent is very affordable in the majority of the country. It just wasnt possible to have a good career easily in Omaha in the past. Soon it will be.
I don't get your Dominos references.
Those are an easy boogeyman but ultimately are such a small component of the overall macro trends we are seeing that should hardly be factored into this
I think you're very likely correct, but would be interested to see any stats on what % of SFH are being bought by firms in certain geos at lower price points, and if it were 3%, for example, how much of an expected impact does that have on price.
Capitalism 101
Better get yours asap before middle class is permanently squeezed out
Don't mean to hijack the thread but curious what % of after tax income (excluding bonus) are folks spending on rent?
I spend about ~50% of my after tax base on rent in NY/LA/SF.
12% baby
That is amazing lol. Are you living with any roommates? NY?
According to the Tenement Museum, in 1900 a 3 room, third floor walkup in a Lower East Side tenement rented for about $15/month. In 1907, a union painter made $22/week, so lets call it $90/mo.
Today you can find a 2 bedroom apartment in Manhattan for 2,000/mo (no, not in Chelsea, but it's not like the LES was a nice neighborhood in 1907). Prevailing wage for a union painter is ~50/hour, depending on the type of painter. At 44 hours a week that his pal in 1907 was working, today's painter is making about $9,000/mo.
So yes, it's more expensive to rent, though this obviously isn't a perfect comparison. But not by a ton more than it used to be. You also live in a lot more comfort these days; the kind of apartment you were living in for $15/mo 115 years ago is of far worse quality than the one you live in today for 2,000/mo. Running water, light and air requirements, fire exits, etc... all of that is objectively expensive to build, so it makes sense that it's a little more expensive on a relative basis to rent an apartment today.
Comparing a 3 bedroom to a 2 bedroom is to say the least not apples to apples. Also where can you find a decent 2BR in Manhattan for $2,000? Even finding a studio at this rate is extremely difficult unless you're willing to make serious compromises.
It's not a 3 bedroom, it's a 3 room. All rooms. If anything a modern 2 bedroom is probably significantly bigger than a 3 room apartment. I've been to the Tenement Museum... 3 rooms is barely anything.
East Harlem, Hudson Heights, etc. I know it's hard to imagine, but that is equivalent (in terms of neighborhood) to what the Lower East Side was back then. Again... I'm not saying you're finding your dream apartment for 2 grand a month. But you can find a place to live. Average rent was a lot higher elsewhere, the LES was a slum - this 10-11 room apartment rented for $225 a month - which if we try to adjust for a 3 room apartment, is more like $65/mo, so 4.3x more than the original one. Again, bringing it back to the modern example - you could find a real nice 2 bed apartment pretty much wherever for $9,000/mo.
I'm not trying to claim any of this is scientific, by the way - data isn't good enough for that, just trying to get close enough
is it really not by a ton more than it used to be? using your example 15/90 = 17%. so the person had a union painter job and paid only 17% of their rent for a three bedroom apartment. can a union painter today spend 17% of his rent on a three bedroom apartment?
I choose my words very carefully, and I did not say 3 bedroom.
And I laid out all the data for you. You can use a calculator as well as I (probably better, actually)
2BR for $2000 in Manhattan sounds like a shitty 6th floor walkup in Harlem with no living room as it’s a true 1BR with 1/2 a bathroom.
Pretty much.
But living in a 3 room tenement in the Lower East Side in 1900 is living in literal slum conditions. Apartments were so bad and so unsanitary and so unhealthy that it inspired a bunch of the first building codes, because people realized that no human should have to live in those conditions. So, yeah... you can live in a cardboard box for free if you want and say you're a Manhattan resident, and that's probably a closer comp to turn of the century tenement living conditions than that shitty Harlem walkup
Rent prices are shocking to me when you consider how much most people make. I work in strategy consulting with a few YOE so I'm making good money compared to the general population, and rent prices sting whenever I'm bored looking at apartments online
It always makes me wonder how average earners stay afloat in big cities (although I'd guess the answer is most people live outside of their means or save very little)
They just live in worse apartments that are farther away from city center.
Actually, quite the opposite. Downtown apartments are typically the ones that are income restricted/section 8 and have facilities for the homeless. Additionally train/bus services are the most frequent here (non-NYC obviously) so people get by without having a car as well.
They don't... which is why a lot of Americans are concerned about affordable housing scarcity.
In NYC it's not uncommon to rent closets for ~$800-$1000/month. Someone on here once said his bro (who works at Citadel/JS iirc) chose to live in one.
There is also income restricted/section 8 housing as well.
what the hell do S&T seniors do since they need to be in the office early morning?
So glad I bought a house early last year and so glad I live in Houston.
and yet you choose to vote (D) down ballot. Transplant liberals will never learn will they?
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